A three-day hearing on how much Dillard's should be paid for its store at the Twin Peaks Mall opened Wednesday with two price tags on the table: a $6.3 million appraisal by Dillard's and a $3.03 million appraisal by the Longmont Urban Renewal Authority.

It'll be up to a three-man commission appointed by the Boulder County District Court to pick a total -- or at least, a preliminary one that will let LURA take the store's title so that the mall can begin an $80 million redevelopment. The final amount is set to be decided in a jury trial next spring.

Even though it's a condemnation hearing, the value is supposed to be based on what a willing buyer would pay and a willing seller would accept, absent any other influences. Attorneys and witnesses for Dillard's argued Wednesday that those other influences have been strongly present since 2007, with a series of blight findings driving conditions at the mall and perceptions of the store.

"There is no question in my mind that the project influence started with the request by (former mall owner) Panattoni in September 2007 to do a conditions survey," said Dan Murphy of Continuum Partners, which among other commercial real estate projects managed the redevelopment of the former Villa Italia Mall, now Belmar, in Lakewood.

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In opening statements, Dillard's attorneys suggested that LURA's appraisals were based on poor comparisons, in some cases using properties that had been "10, 20, even 30 years vacant," while LURA's attorneys said Dillard's had looked at properties as far away as New Jersey but hadn't used any comparisons from Colorado.

"We believe the evidence will show that the city did not blight this mall," LURA attorney Robert Duncan said. "The mall blighted itself ... it became obsolete."

While neither side got deeply into the numbers Wednesday, the retailer is basing its value on what the store would bring if sold to a developer and then immediately leased out, either back to Dillard's or to a comparable store.

"If Dillard's were willing to engage in a sale and lease-back transaction, there would be no shortage of buyers," Murphy said, noting that the chain had a BB-plus rating from Standard & Poor's, that the store was in a great retail market and that its agreement with the mall gave it strong control over its immediate environment. That same agreement was what prompted the condemnation case in the first place, since Dillard's had veto power over any redevelopment project and negotiations between the store and mall owners Newmark Merrill Mountain States had gone nowhere.

The valuation method adopted by Dillard's is one of three that's commonly used, but LURA argued that the rent used in the estimates -- about $6 per square foot -- was more than the Longmont store's revenue could support and that the price arrived at was therefore unrealistic.

Twin Peaks was built in 1985 by CBL & Associates. In 2007, the company considered a $50 million refurbishment, but instead sold to a new owner, Panattoni Development, for $33.6 million. But by 2012, the mall was in the midst of foreclosure proceedings and wound up with another new owner -- NMMS -- for the fire-sale price of $8.5 million.

Dillard's manager Heather Salazar testified that she constantly got questions from customers and employees about the state of the mall. Since June, the store has been dedicated to clearance merchandise, to make it easier to close quickly if necessary.

The store itself has been well maintained, Salazar said, but there had been maintenance issues with the rest of the mall. During the recent cold snap, she said, some locations at the mall registered 52 degrees Fahrenheit.

Dillard's operates stores in 299 locations. According to the chain's real-estate vice president Chris Johnson, 269 of those are in enclosed malls like Twin Peaks, and 30 are in open-air sites, the design proposed for the mall's redevelopment.

Two points that LURA plans to use in its case come from Dillard's itself. That includes a $4 million sale in 2007 of its second location at Twin Peaks -- a similarly-sized store dedicated to men's and children's wear -- and the company's property tax appeals in 2003, 2007 and 2009 that claimed Boulder County had overvalued its main Twin Peaks location. In 2009, the county set the store's value at about $4.8 million; Dillard's then argued the figure should be about $3.8 million.

New coordinator pushes Buffs to work, play at level he expectsJim Leavitt has discovered this much about his new defense at Colorado: He has some talent with which to work, but his players need to put it in another gear. Full Story

New coordinator pushes Buffs to work, play at level he expectsJim Leavitt has discovered this much about his new defense at Colorado: He has some talent with which to work, but his players need to put it in another gear. Full Story